The spin-off in the transfer portal prompted college sports’ new regulator to issue a memo to athletic directors Friday night saying it had “serious concerns” about some of the multimillion-dollar contracts being offered to players.
The College Athletic Commission’s “reminder” was issued about an hour before the College Football Playoff semifinals between Indiana and Oregon, and the news made headlines alongside news of players signing seven-figure deals to move or, in some cases, stay put.
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CSC reminds ADs that under the rules, third-party transactions using players’ names, images and likenesses “are evaluated at the time of entry into NIL Go, not before, and each transaction will be evaluated on its own merits.”
“Without prejudging any specific transaction, CSC has serious concerns about some of the terms of the transactions being considered and the consequences of these transactions for the parties involved,” the memo said.
Under the NIL payment rules set forth in the House settlement, schools can share revenue directly with players from a $20.5 million pool. Third-party deals, often arranged by businesses created to support schools, are used as workarounds for so-called salary caps.
CSC should evaluate these transactions through its NIL Go portal to ensure they have a valid business purpose and are within the scope of fair compensation for services provided.
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The CSC does not list examples of unapproved contracts, but since the transfer portal opened on Jan. 2, college football teams have racked up seven-figure deals to lure players to new schools.
One high-profile case involves Washington quarterback Demond Williams Jr., who initially tried to enter the transfer portal but turned down a reportedly $4 million deal with the Huskies. Legal threats followed, and Williams changed course and stayed in Washington.
“Making commitments now for third-party NIL funds and then considering how to deliver on those commitments leaves student-athletes vulnerable to transactions not clearing, commitments not being honored, and eligibility at risk,” the CSC letter said.
The commission lists two rules regarding the contracts it evaluates, some of which are called “agency agreements” or “service agreements,” looking like attempts to get around those rules.
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— “A tag on a contract does not change the analysis; if an entity agrees to pay NIL fees to a student-athlete, the agreement must be reported to NIL Go within the reporting deadline.”
— “The NIL agreement or payment with the covered entity or person…must include direct activation of the student-athlete’s NIL rights.” This is a reference to the practice of “warehousing” NIL rights by paying first and then deciding how to use them.
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